Talk with pia

The Latte Factor | How much for a hot chocolate!?

hot chocolate finance

It’s been a little quiet on both the blog writing and blog visiting front the past week or two because it’s the school holidays. I had great intentions to keep up with my blogging habits, but somehow that didn’t quite work out! But that’s okay, it was the school holidays after all.

During the school holidays, I did more decluttering. Ever since reading Marie Kondo’s The Life-changing Magic of Tidying up I have been on eternal declutter mode. I will have to write more about it at some point, but that’s not the point of today’s post. Today’s post is… about hot chocolate. (Or coffee, if that’s what floats your boat, the same applies.)


The Takeaway Culture


I don’t normally have a takeaway coffee or hot chocolate habit. I just don’t feel the need. But when we used to go out for brunch, I would get that to accompany my meal. The other day, for the first time in forever, I decided to go and get myself a medium hot chocolate from a cafe we used to frequent. It was the school holidays and I was out doing errands, I was feeling good about myself so decided a treat would be nice.

I have to order soy milk with my drinks these days as my lactose-intolerance blossomed late in life. They say many asians have that intolerance and I scoffed at it until I developed it myself. Whoops. So one medium hot chocolate with soy milk, please. When the waitress told me it would be $6.50, I got the shock of my life.

Six-Fifty bleeding dollars for a small (don’t let the word medium fool you) cup of beverage?

I paid up, because they had already started making it. But my god, that blew my senses out of the water. Have I been living under a rock, I didn’t realise these morning habits were quite that expensive! I thought $4 for a takeaway coffee was already bordering on excessive, but $6.50 for a hot chocolate?

Now, let me be clear. I don’t actually doubt that they need to price it as such in order to cover cost of overheads, labour costs, equipment costs and so on and so forth. I have many friends who work in the industry, I get it. But looking at it from my point of view, where I used to order these things nilly-willy, I have to wonder just how much money have I thrown away on sub-par hot chocolates? How about those office workers I watch making their way across the city holding a takeaway cup in their hand every single morning? (I’m not judging them, they are welcomed to spend how they like, but it made me wonder about the potential in the regular investment in takeaway beverages.)

This is not a new thing, I’m not breaking new ground. Instead, my one small transaction on a random morning started me thinking like it never did before. I did some research and there’s even a name for it, it’s called The Latte Factor.

The Latte Factor

Popularised by David Bach, the latte factor is meant to symbolise the high cost of small, periodic spending. What he wants you to notice is that the true loss, is not in the money spent but rather the interest that could have been, the potential that had been lost.

He even came up with a calculator! So I inputted my $6.50 hot chocolate, calculated it to be spent once per day, and a generous 8% annual return if it had been put into shares or Ratesetter loans, or anything of that sort. (I know it’s generous!) and an expected set-and-forget of 30 years.

latte factor finance


Here are the results:


If you’d like to try your hand at the figures, you can check out the calculator here.


Yeowch. That’s about all I have to say. I didn’t realise just how scary these figures would be. I knew it would be something quite high, but $294,495 on hot chocolate alone for 30 years (if you add in the interest loss)….

Looks like takeaway hot chocolate won’t be entering back into my life for a while. While I know that there are articles that say that these small sums are hardly the vehicle to FIRE, it is most definitely firmly on the anti-vehicle wagon.

The more you know….

And for the record, the hot chocolate was mediocre and way too hot. I burnt my tongue on it. Bleh!


9 thoughts on “The Latte Factor | How much for a hot chocolate!?”

  1. Great post and thanks for sharing that calculator! It is amazing how some of those little expenses can add up over time. Several weeks ago I calculated that I have probably cost myself nearly $50,000 by purchasing my lunch at work almost every day of my career!

    1. Oh gosh, isn’t it scary when you start adding up the numbers and it starts looking insane? Since tracking expenditure, I just balk at the number I come to every month and it’s really doing my head in. Which I guess is a good thing because that means I will actively do something about it!

    1. I was resistant for the longest time, I blamed everything under the sun but lactose! But I bought lactose free milk on a whim and all the issues I’ve had…. disappeared. Darnit.

  2. That picture of hot chocolate looks amazing (sorry, I know that’s the opposite of what this post is about!)

    I find that when I’ve stayed away from buying something for a while, I also get a real shock about how the price has increased. I guess it shows that when you are doing something every day, you don’t really notice that the incremental price rises really end up adding up.

    1. I wish my hot chocolate actually looked like that, I might have reacted less violently to the pricetag! And you are quite right, you don’t notice the incremental price rises if they sneak it onto you 10 cents or 50 cents at a time. It’s really taught me that I need to review my expenses with more scrutiny!

  3. Woah, that’s expensive! Isn’t that the price of milkshake?

    We only have “proper coffee” on weekends. I used to have it at least 3x a week just because the cafe is on my way to work. I stopped for dietary reasons mainly but cost was a factor too. I’ve probably saved at least $1500 the last 2 years for giving takeaway coffee alone. 🙂

    Great post! Thanks for sharing the calculator, too. Sorry your hot choc didn’t taste as nice as $6.50.

    1. You are right! I didn’t even think of it that way – $7 would get me a milkshake. And even at $7 for a milkshake, I’m quite reluctant to pay that these days because I can make my own for so much less and be in complete control of how much sugar you actually consume. That’s kinda scary to think about, really.

  4. I’m a big hot chocolate lover! But $6.50 for a cup is complete madness. For that I can purchase an entire box of instant hot chocolate from the supermarket which will make 20+ cups of hot chocolate. It is easy to forget how much we really spend since it is just a few dollars here and there. This calculator is a great tool to remind ourselves to how much a little bit can add up to!

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